MRT3 Buyout, A DOTC Strategy? #ExpertWriter

MRT3 Buyout, A DOTC Strategy? #ExpertWriter

The MRT3 is the lifeblood of every commuter along EDSA who sees it as their means of transportation for their daily existence. Their expectations for services render must be maximized for the common good. The Filipino people are the users of this train system who wanted comfortable and efficient operations and management. Upgrading the MRT3 train system for development is clearly visible for government to continue the hassles of the past.

The buyout for MRT3 evolved from DOTC Secretary Jun Abaya for the last months when the dilapidated relation of the government to MRT Holdings and MRTC are vanished despite the fact that MRTC’s Bob Sobrepena’s interview with a famous media network. Senate hearing ensued and both parties lay down their cards for the Senate and the Filipino people to clearly understand the background of the case; likewise, the train system breakdowns and the drama of the maintenance provider.

MRT3 buyout by the government seems to be the option at hand ever since?

The DOTC’s only pretending to buy MRTC but they're just buying 27 billion worth of bonds to complete the 100% ownership. The government is waiting for the 2015 budget of 54 billion to process the same.

The DOTC said earlier that modernizing and upgrading MRT-3 are critical to improve the services to passengers in terms of both safety and convenience, formed a transition team composed of engineers and staff of the MRT-3 Office and the Light Rail Transit Authority (LRTA) to closely monitor and assist maintenance work on the MRT-3 system. The move is intended to give government a direct role in ensuring that safety requirements are met and protocols are properly followed on a daily basis in the interest of the riding public.

The APT Global, DOTC Maintenance Provider said, received 1.4 million USD per month supposedly with spare parts. But actually the DOTC is not providing the spare parts to us. It’s been dragging the problems to a more extreme ways until next year during the budget approval.

Major upgrades that are already underway are the addition of 48 brand new train cars and the automation of the railway ticketing system. The new train cars will increase passenger capacity by 66 percent. This means that the current three-car configuration will be made into four-car sets, and that trains will arrive at 2.5-minute intervals instead of the current three minutes. The prototype unit of the new train cars will be tested on the system by August 2015, and once approved, three to four new units will be delivered every month thereafter. While complete delivery of the 48 train cars will be only accomplished in December 2016, each monthly delivery will already afford partial relief to riders.

As such, really, the government wanted an MRT3 buyout for complete operations and management? But they cannot do that without the MRTC approvals. So, the government needs the 2015 budget to buy bonds to complete the 100% ownership of MRT3.

The Department of Transportation and Communications (DOTC) said, Metro Rail Transit Line 3 (MRT-3) Equity Value BuyOut (EVBO) may be expected to take place in the first week of January 2015.

A compromise agreement with MRTC is a must for this purpose and the process of completing the EVBO would have to be agreed on by the Office of the Solicitor General, Landbank, Development Bank of the Philippines, and the DOTC.

The The Department of Transportation and Communications DOTC Secretary is firm when he said, “As long as there is no change in policy, there is an EO (Executive Order) to execute the EVBO. The government’s long-term plan for the MRT-3 is to implement the equity value buy-out of the system’s private-sector owner Metro Rail Transit Corp. (MRTC) as provided for in the Build-Lease-Transfer (BLT) Concession Agreement. Under Executive Order No. 167 s. 2013, the DOTC and the Department of Finance (DOF) are tasked to implement the EVBO to put an end to an ongoing arbitration case in Singapore between the DOTC and the MRTC. The EVBO will terminate the Concession Agreement and transfer ownership of the MRT-3 to the government, saving billions of pesos in equity rental payments paid annually to MRTC by the government. What is critical is the 2015 budget, because the P54 billion (the amounted needed for the EVBO) is in 2015’s budget. If the budget is passed it is in there so we could expect it to roll in the first week of January 2015. The BLT provides for a formula on how to execute the EVBO so there is no room for negotiations. We are buying everything out. The bonds, the remaining equity interest in private hands. The objective at the end of the day is 100 percent government control.”

Therefore, the DOTC was rolling its strategies for MRT3 thing while aiming for the 2015 budget to completely control the bonds. They’re very positive about 54 billion to actually give them the edge over the MRT Holdings. The bonds will create them to fully utilize every transaction without the approval of MRTC, which in turn could hinder to DOTC plans.

Watch this video for complete information behind the DOTC and MRTC relationship